UNITED STATES BANKRUPTCY COURTDISTRICT OF DELAWARE

In re: )) Chapter 11

HARNISCHFEGER INDUSTRIES, INC., )et al., ) Case No. 99-2171 (PJW)

) (Jointly Administered)Debtors. )

MEMORANDUM OPINION

James H.M. Sprayregen Jonathan L. ParshallAnne Marrs Huber Chase T. BrockstedtSteven R. Kotarba Murphy Spadaro & LandonKirkland & Ellis 824 Market Street200 East Randolph Drive P.O. Box 8989Chicago, Illinois 60601 Wilmington, DE 19899

Laura Davis Jones Howard SeifeScotta E. McFarland Thomas J. HallKathleen Marshall DePhillips Steven RiveraPachulski, Stang, Ziehl, Young Chadbourne & Parke LLPJones & Weintraub P.C. 30 Rockefeller Plaza919 North Market Street New York, New York 1011216th FloorWilmington, DE 19801 Attorneys for Rockwell

International CorporationCo-Counsel to the ReorganizedDebtor

Dated: May 16, 2003

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1 The Bankruptcy Code, 11 U.S.C. § 101 et seq., ishereinafter referred to as “§ ____.”

WALSH, J.

This opinion addresses debtor Harnischfeger Industries,

Inc.’s (“HII”) objection to Rockwell International Corporation’s

(“Rockwell”) claim number 7082 (the “Claim”). HII asserts that

the Claim is unenforceable under Wisconsin contract law and

should be expunged pursuant to 11 U.S.C. § 502(b)(1).1 See Doc.

# 8455 at 7. Rockwell asserts that debtor Beloit Corporation,

an HII subsidiary (“Beloit” and collectively with HII,

“Debtors”), owed Rockwell for equipment purchases under pre-

bankruptcy contracts and that following Beloit’s breach of those

contracts Beloit offered certain payment terms to Rockwell to

satisfy the obligations. Rockwell contends that the parties

created a binding contract upon Rockwell’s acceptance of

Beloit’s payment terms and that HII guaranteed Beloit’s

performance of the contract. See Doc. # 12624 at 10-15.

Alternatively, Rockwell requests that the Court apply the

doctrine of promissory estoppel to allow the Claim. See id. at

21. HII characterizes the Beloit-Rockwell post breach

communications as preliminary negotiations and asserts that

neither party assented to a payment agreement outside of the

previously existing contract obligation. See Doc. # 12382 at 9-

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2 This ruling does not affect Rockwell’s breach ofcontract claim against Beloit.

10. HII rejects Rockwell’s contention that a May 13, 1999

letter from Beloit to Rockwell constitutes an HII guarantee.

See Doc. # 12682 at 22-26. For the reasons discussed below, I

conclude that a binding payment plan never existed between

Beloit and Rockwell because the parties never agreed on the

essential terms of the payment plan. Absent an enforceable

Beloit-Rockwell payment terms agreement, HII cannot be liable on

any guarantee basis. Furthermore, I find that even if a payment

terms agreement existed between Beloit and Rockwell, HII did not

guarantee Beloit’s performance thereunder.2

BACKGROUND

Each party relies heavily on the business

communications among the principal officers of HII, Beloit and

Rockwell in support for their respective positions. These

communications provide the fact pattern associated with the

negotiations and the outcome of this dispute rests on the

interpretation of, and the weight assigned to, these

communications. For convenience of reference each company’s

principal participants are as follows:

For HII:

John Hanson (“Hanson”) - President, CEO and Chairman of the

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Board

Mark Readinger (“Readinger”) - Senior Vice President (and also

with Beloit)

For Beloit:

Mark Readinger (“Readinger”) - President and director of

Beloit

William Hackett (“Hackett”) - Executive Vice President

(Operations)

Robert Seidel (“Seidel”) - Director of Purchasing

Bernard Sturgeon (“Sturgeon”) - Purchasing Manager

(Jacksonville, FL)

For Rockwell:

Robert Eisenbrown (“Eisenbrown”) - Vice President (Drives

Businesses)

Robert Van Lieshout (“Van Lieshout”) - Manager, Forest

Products Division

This contested matter results from Asia Pulp & Paper’s

(“APP”) failed attempt to construct a paper plant in Perawang,

Indonesia. In 1997, APP contracted with Beloit for paper

processing machinery. Beloit, in turn, contracted with Rockwell

for several component pieces Beloit needed for its APP project.

Of the several purchase orders generated by Beloit and Rockwell,

the parties only address PPM 4 and PPM 5 (collectively, the

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3 According to deposition testimony and the pleadings, theAPP-Beloit purchase orders contained a term allowing APP totemporarily suspend its obligations for up to one year.

4 Of these amounts, Beloit had already paid $2,961,159.00toward PPM 4 and $961,169.00 toward PPM 5.

“Purchase Orders”) in their pleadings.

APP’s project ran into financial and construction

difficulties and APP suspended its purchasing obligations under

the APP-Beloit purchase orders.3 At the time of suspension,

Beloit had contracted with Rockwell, and Rockwell had already

completed a substantial portion of its obligations to Beloit

under the Purchase Orders. Neither APP nor Beloit initially

informed Rockwell of APP’s intention to suspend the APP-Beloit

contracts. Beloit disclosed the suspension to Rockwell during

a January 25, 1999 status meeting that addressed the progress of

the Purchase Orders. At the meeting, Beloit requested

cancellation figures for the Purchase Orders. Rockwell complied

and advised that total cancellation charges were $23,825,403.00

for PPM 4 and $4,824,833.00 for PPM 5.4 See Doc. # 12682, Ex.

2. Beloit did not definitively cancel the Purchase Orders until

February 11, 1999. In a letter to Eisenbrown, Hackett stated

that Beloit intended to “exercise[] [its] contractual right to

suspend work under the Purchase Order until further notice.”

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5 The Court will identify exhibits to Rockwell’s Doc. #12624 numerically in order to clarify Rockwell’s pleadings andexhibits. Rockwell’s electronic filing contained sixunidentified “exhibits.” However, eighteen separate exhibitsare found within the six filed “exhibits.” Attached hereto isan appendix which identifies the eighteen exhibits by referenceto Rockwell’s filed pleadings and exhibits.

See Doc. # 12624, Ex. 1; Doc. # 12682, Ex. 3.5 The Purchase

Orders only provided for cancellation and did not provide for a

general suspension right. See Doc. # 12624, Ex. 18, at 9-11.

Hackett asked Rockwell to investigate alternative uses for any

completed machinery and also requested a meeting to negotiate

payment terms. See Doc. # 12624, Ex. 1. The meeting would

occur on May 4, 1999, after Beloit received and analyzed

Rockwell’s mitigation of damages alternatives.

On May 3, 1999, Sturgeon circulated possible payment

plan terms to other Beloit employees in preparation for the

Beloit-Rockwell meeting. See Doc. # 12624, Ex. 2. Sturgeon’s

proposal made the following assumptions: (1) that Beloit owed

$2,824,833.00 on PPM 5; (2) that Beloit owed $20,864,244.00 on

PPM 4; (3) cost of money or interest charges were not included;

(4) the payments would begin November 1, 1999; and (5) storage

costs were to be negotiated. See id. Sturgeon calculated that

Beloit would satisfy PPM 5 in eight monthly payments of

$353,104.00. PPM 4 would be paid in eighteen months, seventeen

payments of $1,159,999.00 and a final $1,161,244.00 installment.

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See id.

Beloit presented Sturgeon’s proposal toward the close

of the meeting. See (Doc # 12624), Ex. 5, at 3. During the

ensuing discussion, Rockwell stated that HII would be required

to back Beloit’s proposal with a parent guarantee. See id. The

Beloit representatives promised to discuss the guarantee with

HII personnel and provide Rockwell with an immediate answer.

Hackett coordinated Beloit’s efforts to arrange for the

guarantee and queried Readinger about the possibility of HII

guaranteeing any Beloit-Rockwell payment agreement. See Doc. #

12624 at 7. Readinger told Hackett that Beloit should submit a

guarantee request to HII after Beloit reached an agreement on

the payment terms and to not “let [a guarantee] stand in the way

of getting an agreement.” See id. at 8. Hackett then

telephoned Eisenbrown to inform him that HII would provide the

guarantee if Beloit and Rockwell agreed to a payment plan. See

id. at 9. Eisenbrown requested a written confirmation and on

May 13, 1999, Hackett faxed a letter to Eisenbrown stating that

HII would provide a guarantee “as part of the payment plan

agreement.” See id.

It was not until June 2, 1999 that Rockwell’s Van

Lieshout provided Seidel with Rockwell’s proposed PPM 4

mitigation credits totaling $5,657,516. See Doc. # 12682, Ex.

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6 11 U.S.C. § 502 states:(a) A claim or interest, proof of which is filed undersection 501 of this title, is deemed allowed, unlessa party in interest, ... objects.(b) Except as provided ..., if such objection to aclaim is made, the court, after notice and a hearing,shall determine the amount of such claim as of thedate of the filing of the petition, and shall allowsuch claim in lawful currency of the United States insuch amount, except to the extent that -

(1) such claim is unenforceable against thedebtor and property of the debtor, under anyagreement or applicable law for a reason otherthan because such claim is contingent orunmatured;

12. Van Lieshout also notified Sturgeon that Rockwell would

accept the payment plan as presented on May 4 with the addition

of HII’s guarantee. See Doc. # 12624 at 9. Eisenbrown

purportedly faxed a draft payment agreement and a draft parent

guarantee to Beloit on June 3, 1999. The cover letter requested

that Hackett forward these drafts to Beloit’s legal department

for review. See Doc. # 12624 at 10; Doc. # 12682, Exs. 16-20.

None of the Beloit officers recall receiving this letter. On

June 7, 1999, Debtors filed voluntary petitions for chapter 11

relief in this Court.

DISCUSSION

Contract Claim

HII asserts that pursuant to § 502(b)(1), the alleged

guarantee agreement is unenforceable under applicable Wisconsin

law and, therefore, the Claim must be expunged.6 In Wisconsin,

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a contract is enforceable when a party proves that an offer, an

acceptance and consideration exist. See NBZ, Inc. v. Pilarski,

520 N.W.2d 93, 96 (Wis. Ct. App. 1994). Offer and acceptance

can be demonstrated through “mutual expressions of assent.” See

id. The consideration element is satisfied if an intent to be

bound is proved. See id.

A valid contract requires “a meeting of the minds” and

each party must to agree on the essential terms. See Todorovich

v. Kinnickinnic Mut. Loan & Bldg. Ass’n, 298 N.W. 226, 227 (Wis.

1941). “Vagueness or indefiniteness as to an essential term of

the agreement prevents the creation of an enforceable

contract....” Mgmt. Computer Servs., Inc. v. Hawkins, Ash,

Baptie & Co., 557 N.W.2d 67, 75 (Wis. 1996) (citations omitted).

Indefiniteness and vagueness are contract formation issues that

may be addressed directly by the Court as a matter of law. See

id. In Wisconsin, “parties do not need to agree subjectively to

the same interpretation at the time of contracting in order for

there to be mutual assent.... [M]utual assent is judged by an

objective standard, looking to the express words the party used

in the contract.” See id. (citations omitted).

Courts are reluctant to impose contracts on parties

still engaged in negotiations. However, Wisconsin courts will

enforce oral and informal contracts as long as the terms are

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complete and even though a formal written contract is

anticipated or pending. See Francis H. Leggett Co. v. West

Salem Canning Co., 144 N.W. 969, 972 (Wis. 1914); Van Slett

Craftsman v. C.W. Carlson Co., 562 N.W.2d 927, at *6 (Wis. Ct.

App. Feb. 13, 1997) (unpublished opinion). Conversely, informal

written or oral communications will not form a binding contract

if the parties were still engaged in negotiations and they

intend to be bound only by a formal written contract containing

all material provisions. See Leggett, 144 N.W. at 972. The

question I must address is: “Did [the parties] mean to contract

by their correspondence, or were they only settling the terms of

an agreement into which they proposed to enter after all its

particulars were adjusted, which was then to be formally drawn

up, and by which alone they designed to be bound?” See id.

The record before me leads me to the conclusion that

the dealings between Beloit and Rockwell never left the

negotiation stage. On these facts neither party was entitled to

believe that a payment agreement was binding. Absent a binding

payment agreement, there is no basis to conclude the existence

of a guarantee of such an agreement.

Essential terms were never resolved and the only

evidence of specified material terms is a June 3, 1999

unexecuted draft payment agreement created by Rockwell.

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7 There is some discrepancy over whether the draftagreements were ever sent to Beloit. Beloit’s officerstestified that they had never seen Eisenbrown’s letter or thedraft agreements prior to discovery. As the result would not bealtered, the Court has assumed that the drafts were received byBeloit for purposes of this opinion.

Eisenbrown’s letter presented the drafts to Beloit and requested

that Beloit’s legal department review the documents. See Doc.

# 12682, Ex. 16.7 Eisenbrown also noted that Rockwell personnel

would be available to answer questions and that Rockwell

“look[ed] forward to a speedy resolution of these matters.” See

id. Rockwell’s drafts amounted to nothing more than its view of

agreed to terms. It seems clear that as sophisticated business

persons, Beloit’s and Rockwell’s management would certainly

require specific and unequivocal documentation before paying on

or receiving a $15 million to $20 million promise. Deposition

testimony supports this conclusion. Readinger testified that

Hackett could not bind Beloit to a particular payment scheme

without management approval. See Doc. # 12624, Ex. 14, at 7.

Rockwell’s creation of the agreements also demonstrates that

Beloit and Rockwell intended to bind themselves to the payment

terms only after executing a formal, written agreement. In

answering the question presented in Leggett, I conclude that

Rockwell’s attempted formalization and Beloit’s requirement that

management approve any deal undermines any notion that the

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parties intended to contract by their correspondence alone.

As of the bankruptcy petition filing, it seems clear

that neither party accepted the same price terms. Beloit’s

proposed payment plan assumed PPM 4's cancellation required

payments totaling $20,864,244.00 to be paid over 18 months.

Rockwell’s drafts quoted PPM 4's total outstanding balance as

$15,206,728.00, also payable in eighteen months. Rockwell’s

quote, although more favorable to Beloit on its face, represents

mitigation credits faxed to Beloit personnel on the same day

Rockwell “accepted” Beloit’s payment plan. Only one day after

acceptance, Rockwell faxed its draft agreements containing the

new price term to Beloit. Rockwell’s hasty acceptance and

drafting of the agreements appears to deny Beloit adequate

opportunity to verify, question or negotiate changes to the

mitigation credits as computed by Rockwell. Furthermore, even

as to the draft payment agreement attached to Eisenbrown’s June

3, 1999 letter the parties had not yet agreed on the starting

date for monthly installment payments.

Even assuming that Rockwell and Beloit reached an

agreement on the payment terms, the evidence simply does not

support Rockwell’s assertion that HII guaranteed any such

payment terms agreement. Aside from the fact that there is no

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evidence of a management decision by HII to authorize an

appropriate officer of HII to issue such a guarantee, I find

that the statements in the May 13, 1999 letter from Hackett to

Eisenbrown and the June 3, 1999 letter from Eisenbrown to

Hackett fundamentally undercut any argument by Rockwell that a

parent guarantee exists.

The message given in Hackett’s May 13, 1999 letter is simple

and unambiguous:

“This is to confirm that Harnischfeger will provide acorporate guarantee backing the APP payment plan thatwe presented to you in our meeting last week.Documentation supporting this will be provided as partof the payment plan agreement.”

This letter shows that:

1. There is a reference to a payment plan that has not been

finalized as between Rockwell and Beloit. How could HII

guarantee an obligation that has yet to be specified?

2. The letter is from Hackett as an officer of Beloit. There

is nothing in the letter to suggest that Hackett was exercising

any authority as an officer of HII or that he received authority

from an appropriate officer of HII.

3. The first sentence of the letter states that HII “will”

provide a guarantee. If the June 13, 1999 letter constitutes

the HII guarantee why does the letter express what HII proposes

to do in the future? If the intended effect of the letter was to

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make a guarantee, the sentence would simply have read that

Harnischfeger “does hereby” guarantee or words to that effect.

4. The last sentence states that “[d]ocumentation supporting

this will” be provided. If the May 13, 1999 letter constitutes

a guarantee then there is no need to state that there will be

documentation evidencing such a guarantee.

The June 3, 1999 letter from Eisenbrown to Hackett

clearly shows that the May 13, 1999 letter did not have the

effect that Rockwell now asserts. The June 3, 1999 letter

purports to transmit to Beloit the very documents (unexecuted)

which were intended to result in agreements among the parties.

In addition to forwarding “[p]roposed language” for change

orders, the letter submitted to Beloit a “Draft Payment

Agreement and Parent Guarantee”. Actually, this is a reference

to two separate documents. The letter requests that Hackett

review each document and forward the draft agreements to

Beloit’s counsel. The letter advises that Rockwell personnel are

available to discuss or to answer any questions. What is to

discuss if the guarantee is already in effect? Finally,

Eisenbrown states that “[w]e look forward to a speedy resolution

of these matters.” The clear implication of that sentence is

that there was no resolution of the matters as of June 3, 1999.

As to the guarantee, this implication is consistent with the

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statement of a Rockwell contract administrator in an internal

report of May 20, 1999 that “Rockwell Automation anticipates

receipt of a Parent Letter of Guarantee from Beloit’s parent

corporation.” See Doc. # 12682, Ex. 10, at 9 (emphasis added).

Provisions in the proposed Parent Guarantee and the

proposed Payment Agreement further confirms that there never

existed an enforceable guarantee between Rockwell and HII. In

the third “whereas” clause to the Parent Guarantee it states:

“[w]hereas, a condition precedent to the execution and delivery

of the Payment Agreement is the execution and delivery by the

Guarantor of this Guaranty.” “Execution and delivery” are words

connoting intent to be bound. The proposed Payment Agreement

would not be as effective between Beloit and Rockwell absent

execution by HII of the guarantee. As would be expected, the

proposed Payment Agreement recites that a condition to

Rockwell’s entering into the Payment Agreement is execution by

HII of the proposed Parent Guarantee.

Several other provisions of the draft Guarantee

Agreement are worth noting. Section 6.7 of the proposed Parent

Guarantee relates to HII’s solvency and recites that “[t]he

Guarantor is, and after the execution and performance of the

Guaranty will continue to be, solvent and able to pay its

respective debts as they mature.” Given the fact that HII and

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Beloit filed their Chapter 11 petition within days of the June

3, 1999 letter it seems doubtful that HII could have made such

a representation. Section 6.8 makes reference to HII’s delivery

to Rockwell of audited financial statements as of a “blank”

date. Thus, even as to the proposed Parent Guarantee document

the complete terms had not been finalized.

Statute of Frauds

Rockwell asserts that Hackett’s May 13, 1999 letter is

a writing sufficient to satisfy the statute of frauds. See Doc.

# 12624 at 15. Even if the May 13, 1999 letter could be

construed as an unequivocal statement of a guarantee, as

discussed below, there is no basis to conclude (a) that Hackett

was acting as an authorized agent for HII or (b) that Rockwell

reasonably believed Hackett was such an agent. Thus, there is

no HII writing satisfying the statute of frauds requirement.

Promissory Estoppel

Rockwell argues that “[e]ven if the statute of frauds

were not satisfied, HII would still be liable on its guarantee

commitment based on principles of promissory estoppel.” Doc. #

12624 at 21. Wisconsin law defines promissory estoppel as:

A promise which the promisor should reasonably expectto induce action or forbearance of a definite andsubstantial character on the part of the promisee andwhich does induce such action or forbearance isbinding if injustice can be avoided only by

17

enforcement of the promise.

Hoffman v. Red Owl Stores, Inc., 133 N.W.2d 267, 275 (Wis. 1965)

(adopting Restatement (Second) of Contracts § 90 (1981)). I

address two basic issues: (1) reasonableness of the reliance and

(2) detriment.

Did Rockwell reasonably rely on Hackett’s authority to

bind HII? I find that it clearly did not.

I need to determine whether Hackett had actual or

apparent authority to provide Rockwell with a guarantee.

“Authority can be created in any way in which a person can

manifest consent to another....” Skrupky v. Elbert, 526 N.W.2d

264, 269 (Wis. Ct. App. 1994). An agent’s express actual

authority will be found in the contract between the principal

and the agent. See id. Implied actual authority results when

the agent, and not a third party, reasonably believes he has

authority based on the principal’s actions. See id. With

apparent authority, a principal is liable when “the acts of one

who reasonably appears to a third person, through acts by the

principal or acts by the agent if the principal had knowledge of

those acts and acquiesced in them, to be authorized to act as an

agent for the principal.” See Pamperin v. Trinity Mem’l Hosp.,

423 N.W.2d 848, 853 (Wis. Ct. App. 1988).

Actual Authority

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Hackett possessed neither expressed nor implied actual

authority to issue an HII guarantee. Documents in the record

confirm that the power to issue a parent guarantee did not

reside in any of HII subsidiaries or their officers. See Doc.

# 12624, Ex. 9; Doc. # 12682, Ex. 24. The Omnibus Parent

Guarantee Resolution, adopted by HII’s Board of Directors on

October 16, 1996, recognized guarantee letters only if

authorized by the following HII officers: Chairman, Chief

Executive Officer, President, any Executive Vice President and

the Treasurer. See Doc. # 12624, Ex. 9, at ¶ 1. Hackett did

not hold any position in HII and lacked any expressed authority

to issue a guarantee.

Hackett also lacked implied authority to issue a

guarantee. Based on his knowledge of the omnibus resolution and

on conversations occurring during the Beloit-Rockwell

negotiations, it would have been unreasonable for Hackett to

assume he had authority to issue a guarantee. Deposition

testimony bears this out. Hackett acknowledged discussing a

parent guarantee with Readinger and possibly with Hanson. See

Doc. # 12624, Ex. 12, at 57. Hackett also commented that he

understood no guarantee would be delivered by HII unless “an

agreed plan [was] basically executed first.” See id. at 58.

Hanson testified that even though he had authority to provide

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corporate guarantees, any guarantees were reviewed and approved

by HII’s CEO and CFO. See Doc. # 12624, Ex. 13, at 31.

Finally, Readinger testified that Hackett’s authority extended

to negotiating new payment terms but did not grant him the

authority to bind Beloit to any agreement. See Doc. # 12624,

Ex. 14, at 17. Regarding a guarantee, Readinger recalled that

(1) he and Hackett discussed the issuance of a guarantee; (2)

Beloit would present only a detailed and complete agreement to

HII for consideration; and (3) that he told Hackett not to let

the issue of a parent guarantee hold up negotiations. See id.

at 20.

This testimony clearly shows that Hackett could not

have reasonably assumed that HII had impliedly authorized him to

issue an HII guarantee. Furthermore, Hackett’s testimony

reflects his understanding that a guarantee would be issued only

on condition of a finalized payment agreement. Rockwell’s

contention that Hackett possessed actual authority to issue the

guarantee is simply not supported by the record.

Apparent Authority

Rockwell maintains Hackett was the apparent agent of

HII and that the guarantee is binding as presented to Eisenbrown

by the May 13, 1999 letter. I disagree. Rockwell must

establish Hackett’s apparent agency by clearly showing: (1) an

20

act by the agent or principal justifying belief in the agency;

(2) knowledge thereof by the party sought to be held; and (3)

reliance thereon by the plaintiff, consistent with ordinary care

and prudence. See Silberman, 218 N.W.2d at 733; Pamperin, 423

N.W.2d at 854.

Rockwell does not point to any specific HII conduct

authorizing Hackett’s alleged promise or HII’s acquiescence

after Hackett made the alleged promise. It is important to note

that Rockwell received a duly authorized HII guarantee in

connection with a transaction wholly unrelated to the dealings

at issue here. Rockwell received a letter from Somerset R.

Waters, HII’s vice president and treasurer, on April 27, 1999.

In this letter, HII agreed to guarantee any indebtedness owed to

Reliance Electric (a division of Rockwell) by HII’s subsidiary

Joy Technologies, Inc. See Doc. # 12682, Ex. 26. Rockwell

received this letter less than one month before Eisenbrown

received Hackett’s May 13, 1999 letter. The Waters and Hackett

letters are markedly dissimilar. Unlike Hackett’s letter, the

guarantee issued by Somerset R. Waters contains multiple

paragraphs, is presented on HII stationary and is signed by a

Beloit officer authorized to provide guarantees. Waters’

guarantee is a sophisticated financial document with formalized

terms, including an expiration date, restrictions and a total

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guarantee amount. See id. Hackett’s May 13, 1999 letter lacks

all of this detail and formality. Comparing these two letters,

it seems clear that Hackett’s letter is insufficient to imply

the existence of apparent authority.

As shown in deposition testimony, HII management lacked

knowledge of Hackett’s letter. Although they engaged in

discussions regarding a guarantee, Hanson and Readinger

testified that a guarantee would not be issued unless Beloit and

Rockwell reached a complete payment agreement satisfactory to

all involved. See Doc. # 12624, Ex. 12, at 58 (Hanson

deposition); Doc. # 12624, Ex. 14, at 20 (Readinger deposition).

This testimony is entirely consistent with Rockwell’s

“condition” provision in the proposed Parent Guarantee as

discussed on page 14 above. Hackett lacked authority, express,

implied or apparent, to issue a guarantee and Rockwell’s alleged

reliance on Hackett’s authority to issue the guarantee was

unreasonable.

Detrimental Reliance

Rockwell asserts that in relying on the alleged

representation by Hackett in the telephone conversation of May

13, 1999 and Hackett’s May 13, 1999 follow up letter, it was

injured because it “abstained from pursuing its legal right to

collect on the debt immediately.” See Doc. # 12624, at 21. This

22

assertion has no substance. The Debtors filed their bankruptcy

petitions on June 7, 1999. It is inconceivable that Rockwell

could have commenced a collection action against Beloit,

obtained a judgement and collected on that judgement within the

25 day period between the May 13 letter and June 7 automatic

stay order resulting from the bankruptcy petition. Indeed,

under Wisconsin law a defendant has up to 45 days just to

respond to a complaint. See Wis. Stat. Ann. §802.06 (West 2003)

CONCLUSION

For the forgoing reasons Rockwell’s guarantee claim is

disallowed.

APPENDIX

This appendix is intended to clarify Rockwell’s

exhibits attached to its Memorandum in Opposition to Debtors’

Objections Seeking to Expunge Claim No. 7082 Filed By Rockwell

International Corporation (Doc. # 12624). Rockwell identified

seven exhibits on the first page of its memorandum but attached

at least eleven additional exhibits when filing the memorandum.

Rockwell’s exhibits referenced in the Memorandum Opinion are as

follows:

Exhibit 1 First page following Rockwell’smemorandum.

Letter Dated February 11, 1999 from WilliamHackett of Beloit to Robert Eisenbrown ofRockwell.

Exhibit 2 Second page following Rockwell’smemorandum.

E-mail from Bernie Sturgeon regardingRockwell Automation Proposed Payment Planwith attached calculations.

Exhibit 3 Fourth page following Rockwell’smemorandum.

Agenda.

Exhibit 4 Fifth page following Rockwell’smemorandum.

E-mail dated May 5, 1999 from Robert Seidelregarding Beloit’s offer for a new paymentplan.

Exhibit 5 Sixth page following Rockwell’smemorandum.

Meeting minutes from May 4, 1999 meetingbetween Beloit and Rockwell Representatives.

Exhibit 6 Ninth page following Rockwell’s

memorandum.Letter dated May 13, 1999 from WilliamHackett to Robert Eisenbrown regardingHarnischfeger’s parent guarantee.

Exhibit 7 Tenth page following Rockwell’smemorandum.

Facsimile dated June 2, 1999 from Bob VanLieshout to Robert Seidel regarding PPM 4revised order total.

Exhibit 8 Twelfth page following Rockwell’smemorandum.

PPM 4 revised order total with RobertSeidel’s handwritten notes.

Exhibit 9 Thirteenth page after Rockwell’smemorandum.

Omnibus Parent Guarantee Resolution datedOctober 16, 1996 by the Board of Directorsof Harnischfeger Industries, Inc.

Exhibit 10* Excerpts from the deposition of FrancisCorby.

Exhibit 11* Excerpts from the deposition of RobertEisenbrown.

Exhibit 12* Excerpts from the deposition of WilliamHackett.

Exhibit 13* Excerpts from the deposition of John Hanson.

Exhibit 14* Excerpts from the deposition of MarkReadinger.

Exhibit 15* Excerpts from the deposition of RobertSeidel.

Exhibit 16* Excerpts form the deposition of BernardSturgeon.

Exhibit 17 Purchase Order No. 43B07-LP5 dated September30, 1997.

Exhibit 18 Terms and Conditions of Purchase, dated July21, 1997, between Reliance Electric divisionof Rockwell Automation and Beloit.

25

* These exhibits were identified as numbered by Rockwell on thefirst page of its memorandum in opposition.

UNITED STATES BANKRUPTCY COURTDISTRICT OF DELAWARE

In re: )) Chapter 11

HARNISCHFEGER INDUSTRIES, INC., )et al., ) Case No. 99-2171 (PJW)

) (Jointly Administered)Debtors. )

ORDER

For the reason set forth in the Court’s Memorandum

Opinion of this date, Harnischfeger Industries, Inc.’s objection

(Doc. # 8455) to Rockwell International Corporation’s claim

number 7082 is SUSTAINED so that Rockwell International

Corporation’s claim number 7082 against Harnischfeger

Industries, Inc. is DISALLOWED.

_____________________________Peter J. WalshUnited States Bankruptcy Judge

Dated: May 16, 2003